World News: 23:01 GMT Wednesday 15th May 2019. [Net Element, Inc. via Globe Newswire via SPi World News]
MIAMI, May 15, 2019 (GLOBE NEWSWIRE) -- -- (“Net Element” or the “Company”), a global technology and value-added solutions group that supports electronic payments acceptance in a multi-channel environment including point-of-sale (“POS”), e-commerce and mobile devices, today reports its financial results for the first quarter ended March 31, 2019 and provides business update.
The call will also be webcast live from . Following completion of the call, a recorded replay of the webcast will be available on the website.
“We are pleased with our first quarter results and ongoing progress our team has made to improve gross margins through use of scalable infrastructure and penetration of value-added technologies,” commented Oleg Firer, CEO of Net Element. “We remain focused on reaching profitability as we continue to scale our business in the selected markets.”
The global payments industry continued to deliver healthy growth during 2018 and the first quarter of 2019, with underlying transaction volumes demonstrating even greater strength. We believe that new and disruptive technologies will provide us the opportunity to differentiate ourselves from our competition and continue developing and delivering innovative payment solutions in 2019 and beyond.
We continue to believe that disruptive technologies such as blockchain, IoT, biometrics payments and artificial intelligence will play key roles in future commerce. These technologies will encourage innovation through development of value-added services and cater to merchants and their customers.
We believe Netevia, our future-ready payments platform, will increase the economic efficiency of all transactions made within our ecosystem while serving as a framework and core for a number of value-added services that can connect merchants and consumers directly utilizing these technologies. Specifically, Netevia Payments Platform delivers end-to-end payment processing through easy-to-use APIs and complements Net Element’s ability to perform in a multi-channel environment, including POS, e-commerce and mobile devices and will enable the Company to perform as a hub for disruptive emerging technology solutions.
We reported a net loss attributable to common stockholders of approximately $1.1 million or $0.29 per share loss, for the three months ended March 31, 2019, as compared to a net loss of approximately $1.6 million or $0.42 per share loss, for the three months ended March 31, 2018. The decrease of approximately $0.5 million in net loss attributable to stockholders was primarily due to an increase in the gross margin for our North American Transaction Solutions segment during the three months ended March 31, 2019 as compared to the three months ended March 31, 2018.
The following table sets forth our sources of revenues, cost of revenues and the respective gross margins for the three months ended March 31, 2019 and 2018.
Net revenues consist primarily of service fees from transaction processing. Net revenues were approximately $15 million for the first quarter of 2019 as compared to approximately $16 million for the first quarter of 2018. The decrease in net revenues for the comparable period was primarily related to our International Transaction Solutions segment which experienced continued competition and economic challenges.
Cost of revenues represents direct costs of generating revenues, including commissions, mobile operator fees, card brands expenses, processing and non-processing fees. Cost of revenues for the three months ended March 31, 2019 were approximately $12.3 million as compared to approximately $13.6 million for the three months ended March 31, 2018. The decrease of $1.3 million in cost of revenues for the comparable quarters was primarily driven by the reorganization of assignments from our International Transaction Solutions segment due to continued competition and economic challenges in the selected markets. We are working diligently to offset lost revenues.
The gross margin for the three months ended March 31, 2019 was approximately $2.8 million, or 18.5% of net revenue, as compared to approximately $2.4 million, or 14.8% of net revenue, for the three months ended March 31, 2018. The primary reason for the increase in the gross margin percentage was the result of North American Transaction Solutions processing of transactions utilizing our self-designated Bank Identification Number (BIN) / Interbank Card Association (ICA), recurring profitable cash flows from the portfolios acquired in the prior year, and further acceptance of value-added services by the merchants.
Operating expenses were approximately $3.6 million for the three months ended March 31, 2019, as compared to $3.4 million for three months ended March 31, 2018. Operating expenses for the three months ended March 31, 2019 primarily consisted of selling, general and administrative expenses of approximately $2.4 million, bad debt expense of approximately $0.3 million and amortization of approximately $0.9 million, primarily related to the amortization of acquired portfolios and client acquisition costs. Operating expenses for the three months ended March 31, 2018, primarily consisted of selling, general and administrative expenses of approximately $2.4 million, bad debt expense of approximately $0.1 million, and depreciation and amortization expense of approximately $0.7 million.
To supplement its consolidated financial statements presented in accordance with United States generally accepted accounting principles (“GAAP”), the Company provides additional measures of its operating results by disclosing its adjusted net loss attributable to Net Element, Inc. stockholders. Adjusted net loss attributable to Net Element stockholders is calculated as net loss attributable to Net Element stockholders excluding non-cash share-based compensation. Net Element discloses this amount on an aggregate and per share basis. These measures meet the definition of non-GAAP financial measures. The Company believes that application of these non-GAAP financial measures is appropriate to enhance the understanding by the Company’s investors of its historical performance through use of a metric that seeks to normalize period-to-period earnings. A reconciliation of these non-GAAP financial measures with the comparable financial measures calculated in accordance with GAAP for the three months ended March 31, 2019 and 2018 is presented in the following tables.
Globe Newswire: 23:01 GMT Wednesday 15th May 2019
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